The European Union Emissions Trading Scheme is designed to reduce greenhouse gas emissions. It provides an economic incentive to reduce emissions in the most cost-effective way by capping greenhouse gas emissions from approximately 10,000 energy intensive installations in power generation and manufacturing industry sectors in the 27 EU countries plus Iceland, Liechtenstein and Norway - The Europe Economic Area (EEA). It also applies to circa 1,000 airlines and covers flights between and within EEA Member States with some exceptions. Following the Brexit deal agreed in December 2020 it also covers outbound flights between the EEA and the UK. The Scheme Regulates 45% of emissions in EU and is Currently in Phase 4 (2021-2030). Airlines/aircraft can use simplified procedures if they are classed as a small emitters (<25,000 tonnes in total to from and within the EEA, or <3,000 tonnes within EEA.). Airlines have to surrender allowances (EUAs) for every tonne of emissions they emit covering these flights, with some airlines having a proportion of allowances allocated for free. This free allocation is reduced annually by 2.2% from 2021.
The UK Emissions Trading Scheme is designed to mirror the EU ETS. The cap on greenhouse gas emissions from approximately 1,000 energy intensive installations in power generation and manufacturing industry sectors in the UK and It also covers within the UK and outbound flights to the EEA with minor exceptions. The same small emitters provisions apply as EU ETS and airlines have to surrender UK allowances for every tonne of emissions they emit covering these flights, with some airlines having a proportion of allowances allocated for free. The free allocation will drop at a steeper rate than the EU ETS of 5% per year.
ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), is an offsetting compliance regime aimed at achieving carbon neutral growth (CNG) from 2020 onward. Due to the coronavirus crisis the original 2019 and 2020 average baseline was scrapped and 2019 will be used for the pilot phase of CORSIA which began in 2021. Airlines will have to offset emissions above 2019 levels to achieve carbon neutral growth.
In March 2020 ICAO unveiled the offsets which are eligible for CORSIA compliance. These are:
Eligible units under each of the programs shown above are only those which are issued to activities that started from 1 January 2016.
It is however unlikely that airlines will have to offset any emission in the pilot phase as the sector is not likely to return to pre coronavirus levels until 2024, the next phase of CORSIA.
There are also regional schemes including aviation emissions, both planned and already in place, in South Korea, Mexico, New Zealand and China.
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